+ Personal Property Securities Bill 2008

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Under the latest draft of the Personal Property Securities Bill 2008, retention of title clauses will be made registrable, and a retention of title clause will be void against the liquidator or administrator if it was not registered before the company went into liquidation or administration (s233).

There is an additional twist. A registered floating charge over a company¿s property gives a bank priority over subsequent charges over the same property – but goods that are subject to a retention of title clause are not the property of the company which bought them. All other things being equal, therefore, a receiver appointed under the floating charge would not be able to take possession of the goods and sell them.

However, the Bill requires retention of title holders over property that is inventory to check the register of securities and if, a company has given a floating charge, to give notice of the retention of title clause to the holder of the charge. Failure to do so will result in a loss of priority (proposed s109).

The end result will be that retention of title causes will still be available after the Bill becomes law, but the practical outcome is that many retention of title holders will lose out in contests with the holders of floating charges. This is because many suppliers will simply fail (through inadvertence or ignorance of the law) to comply with the registration and notification requirements.

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